Wealthy People Make Different Choices With Their Money Than …

Per-Anders Pettersson / Getty ImagesEveryone doesn’t spend the same.

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Building wealth and achieving financial independence is like losing weight or quitting smoking.

It is simple, but not easy.

The first requirement of building wealth is to know the difference between assets and liabilities. 

Assets put money into your wallet, preferably each month. They will feed you even if you are not working.

Examples of assets include income-generating real estate, dividend-paying stocks and interest-paying bonds.

As an asset class, investment real estate has the advantage of providing rental income, appreciation and other tax advantages.

Liabilities take money out of your wallet, usually monthly. They will eat your income even if you are working.

The most common liabilities are credit cards with outstanding balances, consumer loans, home equity lines of credit, and home mortgages.

That is correct: Your home mortgage is actually a liability to you and an asset to the mortgage holder, since it takes money out of your wallet and puts it into the bank’s pocket every 30 days.

If you were to lose your job, this liability would be the one that would eat your savings the fastest.

Everyone has expenses. What characterizes poor households is that almost all of their earned income flows into the Expense Box (Fig. 1).

They struggle just to maintain a roof over their heads, food on the table, and a car in the driveway. They have just a little money to put into their Liability Box and no money for the Asset Box.

Dr. Stanley Riggs

Rich and middle class households share similar cash flow patterns. Again, everyone has the basic living expenses in the Expense Box, and the middle class and rich households have proportionately higher living expenses than the poor households.

Rich people are often the successful professionals in the community and are characterized as having high-earned incomes, but usually they also have expensive lifestyles with a lot of “stuff” in their Liability Box. Although they are high earners, they often live paycheck to paycheck. Most of their cash flows from the Earned Income Box down to the Liability Box (Fig. 2).

Dr. Stanley Riggs

But the defining characteristic is the huge amount of “stuff” in the Liability Box, which drains a disproportionately high percentage of the earned income to both buy and support those liabilities.

The second characteristic that you will notice is that, much like the poor households, neither the middle class nor the rich have money flowing into the Asset Box to generate passive income.

This is a tragic domestic cash flow. Unlike the poor, the middle class and rich do have options available to them, but every time they pull out their credit card or checkbook they just keep choosing the wrong options … they choose to put their earned money into liabilities instead of assets.

Dr. Stanley Riggs

As shown in Fig. 3, the wealthy households have an Asset Box and you now see a flow of earned income into the Asset Box. So not only do wealthy households have more money flowing out of the Earned Income Box, but more importantly, they now have additional, passive income being generated in the Asset Box. Although they have more “stuff” in their Liability Box, the wealthy use their passive income rather than their earned income to support these liabilities.

Unlike the poor, middle class or rich, the wealthy households have income generators in the Asset Box, which generate passive income that can now support the living expenses, the Liability Box and, most importantly, flow back into the Asset Box to buy new income-generating assets to continuously build wealth.

What separates the wealthy from the poor, middle class and rich is this automatic feedback loop between the Asset Box and the Passive Income Box. At some level this feedback loop becomes self-sustaining, the Earned Income Box becomes unnecessary, and the household becomes truly financially independent.

So the next time you are considering buying something that will just add more “stuff” to your Liability Box, consider putting your hard earned money to work instead by using it as a down payment to invest in, for example:

• Compact rental houses
• Well-located duplexes
• Small office/warehouse industrial rental units
• Workforce or retiree mobile home parks

Your tenant’s rent should be covering the utilities, property taxes and insurance, along with paying down the mortgage, leaving you with money left over to put towards your next income producing asset.

Soon your Liability Box will be shrinking, your Asset Box will be growing and you will be building wealth and on the road to financial independence.

Dr. Stanley Riggs is the author of “Build Wealth Spend It All: Live the Life You Earned,” which shows how almost anyone can use three basic concepts to build wealth regardless of their age. While establishing and managing his private practice, he developed and managed his own commercial real estate portfolio. With his self-taught knowledge of real assets versus liabilities, economic cycles, and demographics, Dr. Riggs was able to build successful careers in the residential, commercial, industrial, and resort asset classes by staying ahead of the national economic trends. For more information, please visit www.buildwealthandspenditall.com.

SEE ALSO: 
50 Ways To Build Wealth In 2015

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Menopause: The Musical–and a Worthy Workshop For Men–at Flagler Auditorium

The cast of ‘Menopause: The Musical,’ dancing and singing about their favorite time of life.

It wasn’t that long ago when the word “pregnant” was thought too vulgar by television’s traditionally dim-witted censors, as a 1952 episode of “I Love Lucy” reminds us. In 2001, writer Jeanie Linders helped “menopause,” a word kept on the hush in past generations, enter public acceptance with an unlikely comedy, “Menopause: The Musical.” This play, staged twice today at the Flagler Auditorium–at 3 p.m. and 7:30 p.m.–follows four distinct prototypical women who find themselves at a lingerie sale in Bloomingdales—Professional Woman, Iowa Housewife, Earth Mother, and Soap Star—all experiencing similar yet unfamiliar changes as they undergo the “silent passage,” as the show calls it.

Soon they’re engaged in 25 songs that parody popular music from the baby boomer era. The original meanings have been swapped in favor of croonings over chocolate cravings, hot flashes, memory loss, night sweats, and issues in the bedroom. Some of these songs include: not “Puff the Magic Dragon,” but “Puff, My God, I’m Dragging.” Not “Stayin’ Alive” but rather “Stayin’ Awake.” And not “My Guy,” but “My Thighs.”

“They think that they’re losing control and I think that this show has this little magic formula that three-quarters of the way through, and it doesn’t shout it—it’s kind of subliminal—but I think that the message is that there’s still life to be lived,” says Kathi Glist, producer for GFour Productions, the company responsible for this version of the production. “Grab that brass ring and get out there and make the rest of your life the best of your life.”

Linders had originally self-produced the show in a 76-foot converted Orlando perfume shop. That was after she started writing the songs on her own, just for fun, before her friends advised her that she’d really stumbled onto something. They encouraged her to infuse the songs into a musical. Only after she saw it play out herself on that small stage, Glist says, did she really believe she had something. “It’s not Shakespeare or Sondheim. If you look at the script in black and white, you might not think that it’s a must-produce, but seeing it performed, seeing how the audience relates to the girls on the stage, the characters, the material and how uplifting and empowering it is, that’s what grabbed us.”

“I love watching people walk in carrying the burden of not just menopause, but the burden of their day on their shoulders,” Glist says. “You know, as excited as people may be to have a night out or a girls’ night or a night at the theater, you can just see how people walk in the door and when they leave the theater they have smiles on their faces; they’re chattering, they’re laughing, they’re talking about it,” she adds. “This show is a vehicle that I think puts it into perspective for them.”

Ingrid Cole plays Earth Mother, the free-spirited type of mom that, needs no introduction: “She’s trying to keep the peace between the ladies,” Cole says. “Everyone can relate to Menopause. It doesn’t matter what language you speak, what country you live in, the color of your skin or if you’re man or woman. If you’re human walking the earth, you know what menopause is, and if you don’t, you will, soon enough.” There are five characters in the show, she says, and the fifth one is the audience.

Linda Boston plays Professional Woman (the character went by Power Woman in the original production) and takes on the personality of a possible Fortune 500 executive. “We all face this change that we go through and what makes her become their sister in Bloomingdales is this camaraderie.” It’s the similarities in experience that bring the women to the same level.

The show is empowering for women (in addition to all those other transformational buzz words), but Boston says it’s great for men, too. Some patrons have left the show saying it should be a “mandatory male workshop,” Boston says. Men can “stop whispering about it,” she says. “They can figure out what’s going on. Men are really trying to wrap their heads around why it’s the winter and their wives are opening the window in the middle of the night. ‘What’s that all about?’ That’s important—for the other people that you’re living with to understand what you’re going through,” she says. “Instead of hormone replacement therapy, it’s humor replacement therapy.”

GFour Productions has a strong philanthropic legacy of bringing awareness to women’s issues. The company is affiliated with Susan G. Komen, brough breast-cancer awareness into the mainstream, and in the past the company was aligned with the national Ovarian Cancer Coalition. Now that it’s coming to Flagler Auditorium, GFour partnered with Florida Hospital’s Pink Army, a non-profit that supports women with breast cancer. Patrons just have to mention Pink Army at the door, and they’ll get $5 taken off their ticket price and an additional $5 will be donated to the cause.

Menopause: The Musical comes to the Flagler Auditorium for two shows only, Saturday, Jan. 10 at 3p.m. and 7:30 the same night. For more ticket information, call the auditorium’s box office at 437-7547 or visit the website.

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